Correlation Between Eventide Healthcare and Ab Discovery

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Can any of the company-specific risk be diversified away by investing in both Eventide Healthcare and Ab Discovery at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Eventide Healthcare and Ab Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eventide Healthcare Life and Ab Discovery Growth, you can compare the effects of market volatilities on Eventide Healthcare and Ab Discovery and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Eventide Healthcare with a short position of Ab Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eventide Healthcare and Ab Discovery.

Diversification Opportunities for Eventide Healthcare and Ab Discovery

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Eventide and CHCCX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Eventide Healthcare Life and Ab Discovery Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Discovery Growth and Eventide Healthcare is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Eventide Healthcare Life are associated (or correlated) with Ab Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Discovery Growth has no effect on the direction of Eventide Healthcare i.e., Eventide Healthcare and Ab Discovery go up and down completely randomly.

Pair Corralation between Eventide Healthcare and Ab Discovery

Assuming the 90 days horizon Eventide Healthcare is expected to generate 1.23 times less return on investment than Ab Discovery. In addition to that, Eventide Healthcare is 1.33 times more volatile than Ab Discovery Growth. It trades about 0.17 of its total potential returns per unit of risk. Ab Discovery Growth is currently generating about 0.27 per unit of volatility. If you would invest  336.00  in Ab Discovery Growth on April 22, 2025 and sell it today you would earn a total of  70.00  from holding Ab Discovery Growth or generate 20.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Eventide Healthcare Life  vs.  Ab Discovery Growth

 Performance 
       Timeline  
Eventide Healthcare Life 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Eventide Healthcare Life are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Eventide Healthcare showed solid returns over the last few months and may actually be approaching a breakup point.
Ab Discovery Growth 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Ab Discovery Growth are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Ab Discovery showed solid returns over the last few months and may actually be approaching a breakup point.

Eventide Healthcare and Ab Discovery Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eventide Healthcare and Ab Discovery

The main advantage of trading using opposite Eventide Healthcare and Ab Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eventide Healthcare position performs unexpectedly, Ab Discovery can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ab Discovery will offset losses from the drop in Ab Discovery's long position.
The idea behind Eventide Healthcare Life and Ab Discovery Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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